Economic Renaissance Through Education Reform

In reading your foundation’s mission statement, the objectives you have established, and the purpose of your organization, it is heartening to note the emphasis you assign to the dignity of the human being and to provide an equal opportunity for each individual.

You are to be commended for the foundation’s programs that are designed to help educate each individual to achieve his or her greater potential, enhance economic understanding, and to improve the community in which we live. You clearly evidence your commitment to basic values.

America has been blessed in many
ways. One of these blessings has been the educational system that has created the world’s leading
institutions of higher learning. One cannot live in this part of the country and not be keenly aware
and appreciate greatly the number of outstanding colleges and universities located in
Ohio.

However, this level of superiority that we enjoyed for generations cannot continue
indefinitely if the public education system that supplies the students remains
uncompetitive.

Forty-seven years ago, George Orwell wrote a political satire on the world
entitled “1984.” And in it, you will recall, he saw the world divided into giant warring
political segments.

Today, Orwell’s “1984” is a reality … fortunately not as
warring political segments he foresaw 47 years ago, but instead as competing economic areas that
are combinations of national economies.

A fact of life is: The largest and most influential
group will set the trading rules by which all nations will abide in the future.

That is one
reason our country was so successful in the past. We were the biggest, the most efficient, the best
educated, and we had a major impact on the rules of the game.

While the economic map has
changed dramatically, so have the businesses that have the capability and commitment to
compete.

One only needs to look at the tire and rubber industry to see the tradition-shattering
impact of global competition.

Less than ten years ago, a total of eleven different
independently owned tire companies lived and competed primarily in the U.S. Market
Area.

Then came the tidal wave of globalization … and because North America was the
largest tire market in the world, every major company wanted a sizeable share of the action … and
they wanted it immediately.

What occurred was a foreign buy-up of the U.S. Tire industry
to the point where Goodyear is now the only major international American-owned tire company.

In almost the bat of an eye, Goodyear’s prime competitors were no longer the cross-town rivals such as Firestone, Goodrich and General … they suddenly were cross-world rivals
Michelin, Bridgestone and Continental.

But the tire and rubber industry was not unique. A
similar globalization has occurred in virtually every basic core industry … steel, automotive,
appliance, electronics … every industry that once competed intra-nationally for customers
now competes inter-nationally.

Ten years ago, less than 5 percent of U.S.
manufacturers considered a single foreign company among their five primary competitors for the
U.S. market. Today, over 30 percent will tell you that three of their top five competitors for the U.S.
market are foreign companies … and 70 percent of goods produced in the U.S. compete directly with
goods produced in other countries.

Coincidental or not, all of this activity has occurred
simultaneously with the collapse of communism and the iron curtain.

This collapse
happened because there was a demand for freedom and the free enterprise system with access to all
markets … the system that American business developed to be the envy of the world … the system
that gave Americans the highest standard of living in history … and the system that built our
nation.

Yet we, who have grown and prospered as a result of this system, now are restricted
by an economic iron curtain.

The emerging global economic blocs being formed around the
world can be a step in the right direction only if they result in removing the nationalistic trade walls
or the economic iron curtains within their regions of the world.

The economic walls … and
the unfair trading practices … must be removed and they must not be permitted to rise
again.

Contrary to what some would like us to believe, we cannot successfully address the
many problems facing our nation without strong, sustained economic growth. And, we cannot enjoy
a stable and growing economy without strong and successful businesses that will provide the jobs
and revenues to fund our many critical national needs.

A major factor in our lingering
economic problems is the erosion of our nation’s buying base … specifically the erosion of the
middle class … or perhaps more accurately, the manufacturing class.

In 1970, 71 percent of
our population was considered middle class with the bulk of their wages coming from manufacturing
jobs. These were the people who bought new cars, new houses, new appliances, took vacations, and
had the time to get involved in the education of their children.

They were the engine that
drove our economy, and they were the framework of our society.

In 1990, only 63 percent
fit that classification … and the trend has continued downward.

During the decade of the
80s, the U.S. industrial sector lost almost two million jobs as the economy shifted more to services
… and an additional one and a quarter million jobs have disappeared so far in the
90s.

Coinciding with the decline in manufacturing jobs has been the deplorable increase
in our trade deficit that will average well over $150 billion a year for the last three
years.

What is this imbalance really costing us?

Each one billion dollars in export
sales creates an estimated 23,000 jobs in the United States. So multiply 150 … those billions in the
trade deficit … times 23,000.

That means almost three and one-half million Americans are
not working … not earning paychecks … not paying taxes … and not buying products and
services.

And, for the most part, these are the high-wage, high-skill manufacturing jobs that
are the centerpiece of our middle class. And, the loss of these jobs is widening the gap between the
“haves” and the “have nots” in our society.

Today, with our struggle
to compete in global markets and a global economy, our factory jobs … the jobs with good take-home
pay … are evaporating.

In 1970, 26 percent of Americans said they earned their pay in
manufacturing jobs. In 1990, it was under 18 percent … and in the following four years, it has
dropped to below 15 percent.

We are experiencing weak manufacturing job creation largely
because serious problems have become embedded in the structure of our economy. These problems
reflect both some excesses of the 1980s as well as some new challenges.

Complicating the
picture is intense global competition from foreign-based companies that do not face the same profit-stealing impact of U.S. mandates and regulations that drive our costs upward.

There is no
single solution for reversing the trend, but the mistakes of the past must be corrected … and we must
start with the development of a true and comprehensive economic plan … a plan that also includes
a national education program.

If we and our families hope to be enjoying life in the years
ahead, everyone across America has a role to play in this necessary revitalization … in meeting the
challenge of change.

If we do not take an active role … and that will be our choice … then
our cherished standard of living will decline, and we cannot reach our nation’s objectives that we
mutually are striving to attain.

Like the turnaround of businesses, the turnaround of our
nation requires a return to the basics.

Nations historically have prospered because of a
combination of four factors … natural resources, capital, technology, and a skilled and educated work
force.

The rise of our nation was based primarily on two of these factors. The first was
natural resources. We had more natural resources than any other nation on earth.

And
second, we combined this wealth with a unique American invention … a public school system that
made education compulsory.

Universal mass education did not materialize in the rest of the
world until about World War II. As a result, we had the educated workforce that no other nation in
the world could match.

We could take our natural resources and put them together with
technology that much of the rest of the world already knew about, but we could do it better because
we had a more skilled and better educated workforce.

As a result, this nation became the
richest and most prosperous nation in the world.

The rest of the industrial world … much
of which had to be totally rebuilt after World War II … discarded the old ways and rebuilt with
modern concepts. Many took our traditional strengths, including the emphasis on primary and
secondary education, and lifted them to a new plateau.

Our nation, fortunately, is awakening.
We are changing, and we are becoming increasingly competitive … but one area where we continue
to lag is in primary and secondary education.

We all know the value of education. Yet our
nation keeps sweeping under the rug the fact that our basic education system is … in general … not
globally competitive.

Despite the rhetoric and action in some areas, young people continue
to leave our educational system without such basics as reading, writing, comprehension and some
mathematical and scientific knowledge.

This breakdown in our educational system has
contributed to the loss of jobs in the U.S. industrial sector as the economy shifted more to
services.

Nearly 85 percent of our embarrassing trade deficit is now in capital goods and
high-tech products … these are the same products that were once the mainstay of our trade
performance.

And, we must not let the unemployment statistics mislead us. They only
document the unemployed … they do not report on the millions of Americans who are working part-time or who are underemployed.

The millions of manufacturing jobs lost in the last 15 years
have been … in many cases … replaced with people working in the service sector, so these people
are shown as being employed.

However, most service jobs pay significantly less than most
manufacturing jobs, and this change has had an enormous economic impact on those people who,
in the past, were very active in the supply and demand cycle.

But with lower-paying jobs,
that has changed, and the downward economic spiral continues. And it is this lower-paying jobs
problem that is a major contributor to our inability to make a solid, sustained breakout from our last
recession that benefits all of our people.

Now, what was the richest nation in the history of
the world is the greatest debtor nation. We owe more than the aggregate debt of all the third world
countries combined!

The breakdown of our education system has reinforced this downward
spiral because we are failing to adapt to change … we are dreaming and not taking positive
action.

According to the 1990 census, 10 percent of the nearly 160 million Americans age
25 and over have less than a ninth grade education and another 14 percent have some high school
education but did not graduate.

That is nearly 25 percent of our potential working population
who have not graduated from high school.

Among the 16 to 19 age group, more than 11
percent are not even enrolled in high school.

Literally thousands of students graduate and
cannot read their own diploma.

Companies are forced to teach basic skills to their new hires.
Business is more than willing to train its workers in specific skills, but first these workers must be
trainable.

And all of this remedial education increases the cost of the products to the point
where often they are no longer competitive with comparable foreign-made products.

Our
educational system is failing to deliver qualified applicants at a time when the equipment we use and
the products we manufacture are more complex and more technologically advanced than ever
before.

Our primary and secondary education system, once the world benchmark, has not
adjusted to global competition, and we are all part of the breakdown because we have forgotten, as
a society, that skills are only a part of what education is about.

An education system driven
only by the need for ever increasing specialization, which teaches us more and more about less and
less, is inherently lopsided and defective.

I ask — what has happened to the joy of learning —
that encourages rather than inhibits a fascination with questions, processes, ideas and imagination?

This certainly poses an enormous problem for those, myself included, who have to
worry about how we are going to staff our businesses in the coming decades.

The jobs the
changing economy is creating are badly mismatched with the qualifications of people, largely due
to parents and the U.S. education system not doing their jobs.

As American industry has
done, education must undergo major change … major reform … major pain in a process that will
eventually lead to a rewarding level of education for our youngsters.

As the disparity
between U.S. public school education and the needs of the work place widens, the need for business
intervention becomes more acute.

Goodyear, like many companies, supports education in
numerous ways, through our contributions to merit scholarship funds and educational institutions,
contacts with governmental groups and investments in our own associate training facilities.

But our efforts are just a drop in the “education reform” bucket.
Comprehensive change must come from within the family unit as well as the educational field, to
transform our schools into a performance-driven, results-oriented system.

Reform will
require bringing together everyone from the corporate board rooms to the school boards … from the
ivory towers of academia and government to the grass roots.

We must demonstrate a
national commitment to revitalize our entire educational and training process.

Pouring more
and more money into schools, however, does not necessarily improve them. In fact, the contrary has
occurred to the point where our education system is one of the most bureaucratic in our society.

For example, in a 25-year period the number of students in U.S. public schools was
stable. But in that same time frame, the number of teachers rose 57 percent … the number of
principals and supervisors grew by 79 percent … and the number of other staffers grew by 500
percent.

Common sense alone suggests initial reform action in four key areas.

The
first is organization.

All the evidence suggests that operating control of the system
needs to be removed from the bloated supervisory bureaucracy and replaced by synergy at the
community level. Parents, teachers, business, social service agencies and clergy all must play crucial
roles in redirecting the education focus.

The second area of reform should be in school
curriculum.

To balance local operating control, we need tough, globally competitive
standards in math, science, computer literacy and language skills. It is disgraceful that we are the
only major sophisticated country without national education standards.

We must insist that
more time is spent on core subjects, and we must expand the curriculum to permit inclusion of more
non-core subjects that stimulate students’ interests in the arts and communication skills.

And
we may have to increase the length of the school year and the school day to accommodate these
needed changes.

Children in other nations are not basically or inherently smarter than ours
… they just receive more and better schooling.

Korean youngsters attend school 250 days
a year and German students go 236 days, while our children attend school for approximately 180
days a year.

Using German students as an example, they attend school 43 percent more per
year than most U.S. students … and when you do a 12-year comparison, it translates to more than five
additional school years of education by age 18.

With such a disparity, the chances are slim
to none that a youngster here will learn as much as his or her German counterpart.

Third on
the “must change” list is teacher qualifications.

It is easy and common
to blame teachers for the decline of our schools, but it isn’t completely fair.

To educate
students for tomorrow’s needs, teachers must be trained in more flexible, interactive methods and
new perspectives — hands-on learning, team solutions, more emphasis on imagination and creativity,
more writing in all subjects, a greater focus on the interconnection of all subjects, ideas and thinking
skills, and a multi-cultural viewpoint.

And finally, there must be changes in school
funding.

There is a strong body of opinion that believes that parents should have
freedom of choice in selecting a school, and that state and federal funds should go to the schools that
attract the most students through performance and reputation.

Although I may share that
view philosophically, before we can fairly adopt it, everybody should begin the race from the same
starting line. We must adopt an equitable funding formula to eliminate the disparities between
facilities and equipment.

Well, those are just four openers … four starting points, if you
will.

Ahead lies a massive and complex task … and reform in any of these four areas is likely
to have substantial ramifications throughout the system.

But there is no point in changing
the curriculum or lengthening the school year if the same old teaching methods are used, and there
is no point in giving local control of schools to parents and teachers if they are constantly harassed
by the bureaucracy to conform to outdated standards and programs.

The real heart of the
problem is finding solutions that address all the issues more or less simultaneously.

It is one
of those dire situations where the strongest incentive to take the bull by the horns is knowing the
catastrophic consequences of not doing so.

We, indeed, have some enormous problems, and
they will not be solved with anything less than the active leadership of our president and the congress
… and the dedication and diligence of every sector of American society — starting right here in this
room.

Government at the local, state and federal levels must do everything possible to
promote America’s ability to compete.

Our elected representatives … many of whom
unfortunately have never made or sold anything … must be continually reminded to make the
connection between the cost of legislation they are considering and its effect on improving
America’s competitive position.

Every action they take should be put to the litmus test: Will
it help … or will it hinder our ability to compete?

You and I should make certain that we
support those candidates who have clearly demonstrated they understand and are sympathetic to the
concerns and problems facing U.S. businesses. And from our side … we must do our best to make
our companies and organizations more efficient and more productive.

Earlier in my career
with General Electric, I was invited into the office of the legendary retailer, J.C. Penney. I was
running the Hotpoint Division of General Electric and we produced major appliances for
Penneys.

Mr. Penney had known and remembered my father, who almost 50 years earlier
had sold him toy balloons. He told me he was anxious to meet Clyde Gault’s son.

On the
day of my visit, he was celebrating his 90th birthday. Obviously he was no longer the vigorous man
of his youth, but the spirit of a young man rang true in his voice.

He enjoyed sharing some
of his experiences with me and concluded by saying, “Young man, at my age my eyesight may
be failing, but my vision continues to improve.”

With your support and that of
concerned citizens all across America, we must continue the fight to get rid of the fiscal, regulatory
and educational problems that are strangling our economy, that are clouding our vision, that are
adversely affecting our ability to plan realistically, and that are putting our collective future in
doubt.

If we are successful in our efforts to remove the obstacles, we can experience, on a
national basis, the turnaround that Goodyear has experienced and have reason to be genuinely
optimistic about our future.

There can be a rebuilding … a renaissance, if you will … a
renaissance within our great nation that will result in a strong, growing economy, increased jobs and
an improving standard of living … and that means a strong beginning for what could be the new
“American century.”

By working effectively together, I am confident we can
make it happen.

Thank you.

Stanley C. Gault retired as chairman of the board of The Goodyear Tire & Rubber Company on June 30, 1996 where he also held the title of CEO until he retired from that office January 1, 1996.

Currently he serves on the boards of directors of Avon Products, Inc., International Paper Company, The Timken Company and Wal-Mart Stores, Inc.